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With questions regarding China’s demand, most commodities collapsed in the last year but copper prices have held up relatively well. A couple of factors have contributed to the resilient prices of copper outside of the supply situation at the LME. For one, China’s demand continues to grow at 10% per year while the country accounts for 40% of the global demand. The other is that new copper deposits haven’t been found in decades.

So while copper inventories in China and the LME have remained high over the last year, copper prices have maintained a strong stance above $3 per lb.One of the main reasons is that regardless of inventories, copper remains one of the most difficult commodities to mine and find new supplies. This leads to a long-term thesis of investing in copper producers such as global leader Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) or Southern Copper Corp (NYSE:SCCO). The interesting part about investing in copper is that it’s just about as difficult to find a copper stock, as it is to find the commodity in the ground.

Another possibility is to invest in the iPath Dow Jones UBS Copper Total Return Sub-Index ETN (NYSEARCA:JJC), which reflects the price of the copper high grade futures contract that trades on COMEX.

Lack of new suppliesRegardless of the current inventory position, copper remains one of the most difficult base metals to discover and mine. While demand remains strong in China, the weak housing market in the U.S. has led to weak global demand. If the U.S. were to show a dramatic increase in demand, the copper market would surge. When the U.S. last saw strong demand in 2006, China was a fraction of what it is now.

As opposite of oil and gas where new supplies are discovered regularly, copper remains a relic of past finds. The latest major discovery was Grasberg in 1988 or 25 years ago. Prior to that it was Escondia in 1979 or nearly 35 years ago. The below slide from the Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) investor presentation highlights the limited discoveries in the last few decades:

Freeport or Southern Copper?The major issue with investing in copper is that limited options exist outside of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) or Southern Copper Corp (NYSE:SCCO) and both have drawbacks. Freeport has always been the major proxy for copper until it recently purchased significant assets in the oil and gas industry. It still remains primarily a copper play with over 50% of revenue from copper products.

Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) operates 13 mines all around the world with production in North America, South America, Africa, and Indonesia. The company listed its second-quarter net cash cost of producing copper at $1.85 per pound, a level significantly higher than the $1.49 per pound from the prior year due to the issues surrounding casualties in Indonesia that shut down the operation for up to six weeks.

Southern Copper Corp (NYSE:SCCO) remains a difficult investment theory with the 81.5% ownership by Grupo Mexico, a Mexican company listed on the Mexican stock exchange. Though Southern Copper Corp (NYSE:SCCO) is based in Phoenix, it isn’t as transparent as Freeport, and it remains a smaller competitor with plans to expand to 1,175,000 tons by 2017. Conversely, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) expects to expand beyond 5 million tons by that time frame.